Five Things We Learned About the South Korean Economy

South Korea’s exports grew at a faster pace than expected in July following a weak rebound the previous month. Exports in July rose 5.7% from a year earlier following a 2.5% gain in June and a 1% drop in May. The July reading beat the median 4.6% increase forecast by a Wall Street Journal survey of economists.

Here are the key takeaways from July’s trade data:

Robust exports to advanced economies:

Advertisement

A pick-up in demand from advanced economies was a main driver of strong growth in South Korean shipments last month. In July, exports to the U.S. surged 19.4% from a year earlier—the fastest pace in nine months—and shipments to the E.U. and Japan grew 11.5% and 6% respectively in a turnaround.

Weak shipments to China:

Emerging economies, especially China, are worrying. South Korean shipments to China, which absorbs a quarter of South Korea’s total exports, fell 7% in July from a year earlier in a third-straight monthly drop. The trade ministry said South Korea is “concerned” about shrinking exports to its biggest trade partner.

Brisk sales of mobile handsets and cars:

South Korean exports of mobile handsets and cars jumped 24.6% and 20.8% respectively in July from a year earlier. The ministry said LG Electronics Inc.’s release of a new G3 smartphone model and the E.U.-Korean agreement on an additional cut to tariffs on cars helped boost sales.

Slow exports of computers and petrochemical products:

A slowdown in the global personal computer market led to weaker South Korean PC exports, the ministry said. South Korea also suffered a setback in exporting petrochemical products to China, which is reducing imports of such goods while improving its own supply capacity at home.

Growing imports:

Last but not least, South Korean imports in July grew 5.8% from a year earlier—the fastest pace in two years and five months—in what can be a sign of improving demand at home. The ministry said steel and petroleum products as well as crude led to the solid rise in imports last month.